Beware of Men Economic Hit

by Samantha Kumarasinghe

(June 03, Colombo, Sri Lanka Guardian) American Economist John Perkins in his book “Confessions of an Economic Hit Man” describes chilling true stories of his role in building the “American Economic Empire” by economically, socially and environmentally destroying Latin American, African, Middle Eastern and some Asian countries.

He describes Economic Hit Men (EHM) as highly paid professionals who cheat countries around the globe out of trillions of dollars. The tools of EHM include Fraudulent Financial Reports, Rigged Elections, Payoffs, Extortion, Sex and Murder.

Although he had actually been an EHM, John Perkins was introduced to the above countries as a Leading Economist and a Consultant to the World Bank, IMF and other leading organizations in the world. He writes in his book that he convinced these countries to sign trade and economic agreements which were in fact highly unfavorable. In some cases these agreements were to grant huge loans for projects that were awarded only to US companies. When the US companies completed these non-viable projects, the above countries ended up with huge debts they could not afford to pay back. Using such devious techniques EHM have helped US Corporations, Banks and Oil Companies, owned by few ‘greedy’ families in the US to enormously accumulate wealth. This process also made few people from these countries enormously rich at the expense of millions of indigenous people. According to John Perkins, when these countries were unable to pay their debts, the US government used them to support its political agendas, by establishing puppet governments. He also boldly says that when EHM failed another set of CIA-sanctioned Hit Men known as “Jackals” moved in and even assassinated leaders who opposed agreements put forward by the EHM. He quotes Ecuadorian President Jaime Roldos and Panama’s President Omar Torrijos both killed in separate plane crashes in 1981, as the work of such Jackals.

He further writes that when the EHM and Jackals failed the US government used military force like in the case of Iraq and Afghanistan to establish puppet governments that they desired.

Every country that the US Economic Empire expanded into has seen the poor becoming poorer and ending up with disastrous civil unrests and internal conflicts. In Ecuador, an oil rich country with a population of 13million, poverty levels grew from 50% to70% and unemployment increased from 15% to 70% while the public debt increased from USD240 million to USD16 billion, between 1968 to 2003 due to unfavourable agreements signed under the influence of the EHM. He points out that even though the US Economic Empire had grown, the benefits of that had not filtered down to the average American citizens, but immensely benefitted only the above said families that own most oil companies, banks and corporations in the US. Instead average American citizens are being subjected to repercussions in the form of threats such as the 9/11 attack in New York. He concludes by saying that the Global Economic Empire has failed and it must be denounced.

The above global realities cannot be ignored in analyzing the current Sri Lankan situation and setting future economic strategies. Sri Lanka defeated terrorism sacrificing the lives of tens of thousands of brave soldiers. We now look forward to an accelerated yet sustainable economic growth. After 30 years of suffering, Sri Lankan entrepreneurs and professionals have now got the opportunity to ride this wave to success. Unfortunately they have the risk of losing this golden opportunity as India is adopting similar policies of a failed US economic empire, by trying hard to get Sri Lanka to sign various unfavourable trade agreements with India.

On 28th December 1998, during Sri Lankan President Chandrika Bandaranaike’s Indian visit, India convinced her to sign a Free Trade Agreement known as “Indo-Lanka Free Trade Agreement” (ILFTA) despite objections from Sri Lankan officials, as it had not been fully studied by the officials of Department of Commerce in Sri Lanka. However due to this unwise political decision by the former President, ILFTA came into operation from the year 2000, and it has been hugely in India’s favour. This FTA covered “Free Trade in Goods” except for some products that were in the negative lists of each country. After signing the FTA, India imposed many “Non Tariff Barriers” preventing Sri Lankan products from entering the Indian market. In the meantime Indian exports to Sri Lanka immensely benefitted following the FTA. The graph below shows how the trade gap between Sri Lanka and India has widened in India’s favour from 2003 to 2008.

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The above exports from Sri Lanka were inclusive of Vanaspathi and Copper which, were mainly handled by some organized Indian businessmen and these had no real economic benefit to Sri Lanka. However the Indian team and a couple of Sri Lankans supporting them have used these figures to mislead the Sri Lankan Government and the public. One should analyze these figures carefully to understand the real situation.

When Sri Lankan exporters brought up their problems and unfair treatment, the Indian side proposed to sign a further agreement known as “Comprehensive Economic Partnership Agreement” (CEPA) and strongly suggest that CEPA will solve all problems in the ILFTA. One could argue this is similar to methods the US Economic Hit Men adopted to strangle small countries further and further, until the small countries were under their total control. A closer look at the CEPA proposals will clearly reveal the potential dangers to Sri Lanka. CEPA covers the following areas.

1. Trade in Goods
2. Investments
3. Trade in Services
4. Free movement of people

In a nutshell CEPA will allow Indians to setup even a small business in Sri Lanka and bring employees from India to work in such businesses. Even the families of such employees can be brought. For an example a Lawyer, Doctor or even a Barber can start a small business and work as a single employee or bring in other employees. Sri Lankans too will be able do the same in India. But in reality it will be Indians who will flood into Sri Lanka than the other way around. The reason being many Indian managed Multinationals and Indian owned businesses in Sri Lanka and higher number of unemployed or under employed qualified people in India.

What Sri Lanka should have done was to totally reject the Indian proposal for CEPA and asked India to remove the “Non Tariff Barriers” and to properly implement ILFTA. However the Indian pressure was able to get Sri Lanka to negotiate on the proposed CEPA agreement. The Sri Lankan discussion teams were lead by officials from the following departments.

Trade in Goods – Department of Commerce, headed by Director Commerce

Trade in Services including free movement of people – Institute of Policy Studies, headed by Executive Director

Investments – Board of Investments, headed by Executive Director - Research

Director Commerce was designated as the overall leader of the Sri Lankan negotiation team. However for some undisclosed reason the Executive Director of Institute of Policy Studies has been the person heavily promoting CEPA with the help of another person who is a head of a NGO. Since 2005 the negotiations are going on but part of the actual CEPA proposals have been kept a top guarded secret all this time. Although the Indians and one or two of their Sri Lankan supporters claim that the CEPA will have immense benefits to Sri Lanka, the complete agreement has not been shown to any of the Sri Lankan Industrialists, Service Providers or Professionals.

With the information available, it is clear that if signed CEPA will no doubt put Sri Lanka into the same state that Nepal is in today. Nepal a country with a land mass of little over twice the size of Sri Lanka and a population of about 24 million is in deep poverty and in a political mess.

The Indian team and IPS promoting CEPA use few business chamber officials to promote the benefits of CEPA, but one must be careful as these chamber officials are employees of Multinational Corporations that have their head quarters in India. Therefore it is worthwhile if the Government of Sri Lanka conduct a proper study of Indian connections of the above said Government and chamber officials before accepting an agreement negotiated by them.

CEPA is a very adverse agreement that could even lose Sri Lanka’s political independence and must not be signed in its present context. Further the government should investigate why some of its officials have proposed to the government such an agreement and take corrective measures if necessary.

Free Trade and Economic Partnerships have brought great disaster to small countries. In the EU, Iceland has already gone bankrupt and Greece and Spain are on the fast slope towards bankruptcy. Italy is said to be next in line. As a result Euro has crashed badly in recent months. USA is now moving away from Free Trade to Fair Trade.

At the end of his confession, Economic Hit Man John Perkins suggests few steps that the smaller countries should take to prevent larger countries with greater economic power, destroying them. The most important among what he has suggested is to “Protest against Free Trade Agreements”. Under these circumstances Sri Lanka has to think very seriously about the people who try hard to promote a CEPA between Sri Lanka and India.

What I have said above is in no way an anti Indian statement. I have my best foreign friends in India. We have been an independent Island with a friendly relationship with our big neighbour India for thousands of years. We have never posed any threat to India in any manner. However as a patriotic Sri Lankan, I consider it as my prime duty to protest and resist whenever I see any threat to my motherland. I am sure any patriotic Indian would do the same. Therefore I believe a country like India built on the principles of great Mahatma Gandhi should not follow the principles of a failed American Economic Empire.